Governor hails 1st phase of 10% tax cut

Higher state sales fees go into effect Sunday

COLUMBUS — Drawing attention to what his tax commissioner characterized as the “first tangible element” of an income tax cut, Gov. John Kasich said Friday he remains intent on eliminating the tax altogether.

“It would be ideal, but you could see how difficult it was to do this tax cut,” the governor said at the Westerville Grill near his home, where he marked the first paycheck-withholding adjustment to take effect as soon as Sunday for what will ultimately be a 10 percent tax cut.

“Fortunately, members of the legislature bought into it,” Mr. Kasich said. “The fact that we’ve been able to be more efficient in running the government allowed us to get part of the way there, but I think tax reform is still very important. But it’s not easy.”

He said he believes conservatives at the national level “lost interest” in that position.

“Cynics would say we do this because we’re trying to get votes,” Mr. Kasich said. “I’m doing this because I know, as these taxes go down, they encourage work and investment. We can do much better … but the debate kind of went away for a while.”

The tax package also included a 50 percent income tax cut on the first $250,000 earned by small business owners.

There was a bit less discussion Friday about the quarter-of-a-cent hike in Ohio’s base sales tax that also takes effect Sunday. That takes Ohio’s sales tax to 5.75 cents on the dollar. In Lucas County, the total rises to 7 cents with the local piggyback tax.

The sales tax also will expand to include previously untaxed magazine subscriptions and digital downloads of such material as books and music.

Over three years, all of the tax changes are expected to result in a net $2.7 billion tax cut for Ohioans. How it shakes out for individual taxpayers, however, will depend on how much each earns and spends.

“John Kasich’s values are on full display here as he continues to shift the tax burden onto the backs of seniors and middle-class families in order to pay for tax breaks for the wealthy and well-connected,” said Ed FitzGerald, Mr. Kasich’s expected Democratic opponent in 2014.

“The fact is that regular Ohioans will have any income-tax savings negated by higher sales and property taxes, while the wealthiest Ohioans get a $6,000 tax break,” Mr. FitzGerald said. “That's nothing to brag about, and it's yet another reminder of this governor's misplaced priorities."

The income-tax cut was retroactive to the start of this year. It will be phased in at 8.5 percent this year, 9 percent in 2014, and 10 percent in 2015.

The late-year withholding rate adjustment of 9 percent should show up in checks for pay periods after Sept. 1.

“This is a welcome change,” said Joe Popp, tax supervisor for the Dublin-based Rea & Associates accounting and consulting firm. “All the taxpayers that I’ve talked to, no one is raising their hand and saying this is a horrible idea.”